Crisil revises DCM Shriram's rating to ''BBB-/Stable''

Mumbai, Oct 13 (UNI) Crisil has revised its ratings for DCM Shriram Industries from ''D'' to ''BBB-/Stable''.

The change in rating is owing to DCM Shriram's timely honouring of debt obligations as per the restructuring package granted to it.

Crisil expects continued improvement in DCM Shriram's turnover and profitability, a Crisil release here said.

DCM Shriram's performance has been improving consistently over the past five years. For the year ended March 31, 2006, the company's net sales stood at Rs 7.03 billion as against Rs 5.32 billion during the previous year. The company reported a net profit of Rs 0.29 billion compared to the net loss of Rs 0.18 billion during the previous corresponding period, the release said.

The improved performance, coupled with timely payments as per the restructuring package granted to it by its lenders, has resulted in a significant correction in its capital structure, the release said.

Crisil expects DCM Shriram's capital structure and debt protection measures to continue to improve despite the company contracting additional debt for its ongoing capex programmes. This improvement would be driven by increased accruals from additional investments, planned repayments, and lower interest costs as a result of restructuring, the release said.

The company's weak capital structure, resulting from a high gearing of 1.61 times as on March 31, 2006 and the limited applicability and sliding margins in the industrial fibre segment, temper these rating strengths.

Crisil believes that DCM Shriram's weak capital structure would constrain its ability to withstand unforeseen business pressures, particularly because the company's competitors have larger scale of operations and stronger financial profiles, the release added.

UNI AR MAZ SKB1545